In payroll, full and final settlement is famously given the term FnF settlement.
This FnF settlement or full and final settlement is defined as a process that is said to happen when an employee makes a decision to leave or take exit from an organization, company, or agency that they are currently working at or, in one other case, the employee is directly terminated to work for the any of the said workplaces by the employer themselves. In situations when this abrupt sort of, one would define it as quitting or firing happens, then the employer is required to make a full and final settlement of all the due present in the lump sum amount of the salary. This salary also must include the incentives as well as the bonuses.
This FnF settlement policy has proven to be quite significant, as it specializes in handling the payroll of special employees, which is different from managing the payroll of regular employees who work full time or part-time or on a contract basis. The FnF settlement is responsible for taking care of all the payments that are needed to be cleared to the employee. This balance payment mostly includes retirement benefits, bonuses, gratuity, incentives, and so on.
The full and final settlement of the payment via the FnF settlement policy must be done on the last working day of the employee who is leaving their organization, company, or agency or being terminated by their said workplace. The clearance of the payment, however, takes a considerable amount of time which generally and typically spans from 30 – 45 days after the proper lady working day of the employee.
Here are the various components of Full and Final Settlement: